What is ahead for commercial real estate in 2022?
A quick overlook at the commercial real estate in Egypt!
Internationally, the supply and demand for commercial real estate are increasing, despite the fact that many people and businesses were affected because of the pandemic. On the local scale, real estate developers in Egypt held the same positive outlook for commercial real estate in 2022 until the depreciation of the Egyptian Pound occurred. They even stated that 2022 will witness a strong return of demand for property coinciding with economic recovery from the effects of COVID-19.
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However, with the current economic situation the future of commercial real estate, much like many other industries, is not very clear.
Adding to that, Egypt's real estate market is fragmented, with a large number of real estate companies. To match the current demand, the developers are attempting to bring new and lower-cost goods to the market by trying new innovative solutions, as well as evolving technology advancements, in order to boost the market in terms of higher transactions and better asset management.
We will notice this progress through the rise in demand for office spaces across greater Cairo and an increase in demand for hotels and office spaces across key cities in Egypt.
The rise in demand for office spaces across greater Cairo:
Office space is in high demand in both the East and West of Cairo. People always search for flexible office spaces for rent in Cairo due to its prime location. New Cairo is a more desirable location for corporate tenants because of its superior construction quality, ample parking, and closeness to the New Administrative Capital and the airport.
The establishment of premium business parks in 6th October City, another popular office destination, has successfully enticed tenants wishing to relocate from conventional downtown Cairo to less congested places. In comparison to New Cairo, however, 6th of October City does not profit from its closeness to the airport or the New Administrative Capital.
Increase in hotels across key cities in Egypt:
Luxor, which has more open archaeological sites than any other city in Egypt, has seen recent discoveries that have made headlines throughout the world. On the West bank of the Nile River, the 2019recovery of 30 virgin wood coffins dates back 3,000 years at El-Assasif cemetery, the site of burials from various ancient Egyptian dynasties.
As well as the Avenue of Sphinxes' opening celebration, which caused hotels to be fully booked for days, was the second such lavish event in 2021-22; this was actually such a hit that it’s becoming an annual event. Simultaneously in Cairo, The Grand Egyptian Museum's opening, which has been repeatedly postponed, is even more eagerly anticipated. All of this progress is making a remarkable increase in hotels across Egypt!
What does the future hold for commercial real estate internationally?
Depending on function, there are four types of commercial real estate to look for in2022:
· Office space
· Industrial use
· Multi-family rental
· Retail
Office space:
As renters reconsider how they use their space, office demand seems to have a rocky future due to the shift to remote working as owners will need significant capital to remain competitive in the future. The demand for co-working spaces is set to rise as people lean more towards shared offices due to the new hybrid model. So, the demand for large office spaces could decrease.
Industrial use:
While the development of online shopping contributes to rising demand, warehouses and distribution centers also serve brick-and-mortar retail and business-to-business transactions. It is a magnet for investors as it provides long-term income and appreciation. It is expected to foresee more demand in the future.
Multi-family rental:
In2021, the multifamily market performed exceptionally well, as capital surged into the sector, offering owners such unbelievable prices that they couldn't refuse to sell. Hence, it is expected to continue to grow in 2022.
Retail:
Even though consumers have trillions of dollars in savings and unmet demand, the recent spending boom will most likely be short-lived. Physical stores, especially malls, will always be required. There aren't as many of them as there used to be. Years will pass before the process of achieving equilibrium between in-store demand and supply is completed. However, it is expected for the on-ground stores and online stores to rise at the same rates.
As long as you pick the right areas, 2022 promises to be another fantastic year, as industry executives and capital providers remain confident that ongoing economic expansion will strengthen demand across most property categories. And on the local level, the recent depreciation of the Egyptian Pound will affect commercial real estate in Egypt, and we may face another decline.
References:
https://www.mordorintelligence.com/industry-reports/commercial-real-estate-market-in-egypt
https://dailynewsegypt.com/2021/12/13/egypts-real-estate-market-to-recover-in-2022-developers/
https://www.eisneramper.com/commercial-real-estate-outlook-0222/
https://www.investopedia.com/terms/c/commercialrealestate.asp
https://www.forbes.com/sites/forbesrealestatecouncil/2021/03/12/commercial-real-estate-outlook-a-look-back-at-2020-and-whats-ahead-in-2021/?sh=2776001616d7
https://www.amcham.org.eg/publications/business-monthly/issues/272/August-2018/3759/capturing-the-rising-trend-of-coworking-spaces
